Leaders and laggards

October 27, 2014

UK companies are reliant upon people in developing countries to mine, grow, harvest, make, assemble and pack many of the products which we buy here.

There has been increasing concern about the role that companies play, particularly in developing countries.Human rights violations globally have risen a terrible 70% since 2008 and corporate abuse is a significant part of this story.

Yet the response of UK governments past and present has been to encourage companies to make voluntary improvements – the ‘carrot’ rather than the ‘stick’ approach.

Some businesses have risen to this challenge. They are working hard to have good community relations, long term relationships with suppliers and to pay workers in their operations and supply chains a living wage. These long term relationships mean that suppliers can, for example, commit to safer buildings, employ staff on long term contracts and provide training.

For example, Spanish fashion giant Inditex (which owns UK high street brand Zara) has an agreement with the global trade union IndustriALL. The union has been able to carry out factory inspections in seven different countries, monitor working conditions and help the company work towards paying a living wage throughout its supply chain.

Other smaller companies which are working to improve conditions in their supply chains include Tropical WholefoodsZaytoun and of course Traidcraft itself.

We often refer to these companies as ‘leaders’ – but they are few in number. At the other end of the scale are companies we talk about as ‘laggards’. These are the ones which subsidise their business activities on the back of child labour, trafficked workers, or stolen land so that they can sell products at a cheap price. Or they use forced and excessive overtime to bring products to the market very quickly. Or they simply turn a blind eye to the dubious activities of their suppliers.

Laggard companies such as these pay little attention to the impact of their business decisions on people overseas, and repeat decisions even when they could foresee that this would result in harm to workers, local communities or the environment.

A key point to understand in this landscape is that the persistence of laggard companies in continuing their poor practices undermines the attempts of leading companies to improve their practices. Even a fair trade company like Traidcraft is affected. Sales of our food products depend on pricing set by the wider market.

The on-going impunity and actions of laggard companies risks perpetuating a ‘race to the bottom.’

This is why Traidcraft is calling for all businesses which operate in the UK market to be held to account in the UK should they harm people overseas. Better businesses have nothing to fear and much to gain if the UK government was to level the playing field in this way.

We want to work with others, including businesses, to bring this about.

Fiona Gooch is Traidcraft’s Senior Policy Adviser for the Private Sector